The Central Committee of the Democratic League: Some places should strengthen supervision on disguised financing under the name of PPP

 The Central Committee of the Democratic League: Some places should strengthen supervision on disguised financing under the name of PPP

Proposal points out that with the acceleration of urbanization process in China, the demand for various types of public facilities construction has increased substantially, and the government debt burden is also increasing day by day. Party committees and governments at all levels attach great importance to resolving government debt. One of the important measures is to vigorously promote the mode of government and social capital cooperation (hereinafter referred to as PPP) in the field of public services. In recent years, PPP projects have made great progress, but there are some problems in the actual operation of some projects, which affect the effectiveness of promotion, to a certain extent, weaken the credibility of the government, and affect the construction of government integrity, which should be paid great attention to. The main problems are as follows:

First, some local governments borrow the name of PPP to finance in disguised form. Investors dont take risks. In the form of clear stock debt, government guarantees and repurchase commitments, the government carries the bottom, not only does it not relieve the burden of the government, but also makes the government bear high-interest debt. The second is the solidification of thinking habits. At the grass-roots level, there are conflicting and panicky feelings towards PPP mode, and the idea is solidified. They prefer to borrow money by themselves rather than participate in social capital. Third, there is insufficient legal protection. The current relevant laws and policies are of low level, ineffective and unclear division of responsibilities. There are overlapping and conflict phenomena in relevant laws and regulations such as finance, finance, land management and engineering construction management. In 2015, the Ministry of Finance, the Development and Reform Commission and the Peoples Bank of China jointly formulated the Opinions on the Implementation of the Model of Promoting Government and Social Capital Cooperation in the Field of Public Services, but the contents are not comprehensive and specific enough. Once there are differences in projects, it is difficult to have an appraisal criterion, which increases the difficulty of resolving disputes. Fourth, department coordination is not smooth. There is no corresponding overall coordination mechanism, and the project competition mechanism is imperfect, the exclusive mechanism, risk sharing and income distribution mechanism are unreasonable, and there is a tendency of rebuilding construction, light operation.

To this end, the Central Committee of the Democratic League has proposed in the aforementioned Proposal that:

First, change the concept of investment and financing. The State Council has made it clear that local government financing can only be achieved by issuing government bonds or adopting PPP mode, thus stripping the government financing function of financing platform companies. The leading mode of investment and financing for local construction must be transformed. We should deeply understand that PPP mode is not only a way of investment and financing, but also a change of the traditional supply concept and mode in the field of infrastructure and public services. Social capital should firmly establish the concept of value investment, abandon the speculative mentality of short, fair and fast, and adhere to the concept of win-win cooperation.

2. Improve laws and regulations and management system. Enhance legislative protection, promulgate relevant laws and regulations from the national level, and amend the Procurement Law and the Bidding Law in advance. Continuously standardize and improve the management system, issue and improve the project operation guide, form guidance on risk assessment, reasonable government commitment, performance payment, exit mechanism, dispute settlement, simplify the pre-project approval process, and scientifically control the operation cost. Establish and improve the working system, such as PPP dispute settlement mechanism, risk sharing and income distribution settlement mechanism, dynamic management and regulation mechanism.

Third, strengthen the supervision of integrity. We should improve the information disclosure system of PPP projects and strengthen the supervision of the whole cycle information of PPP projects by financial departments. Fully do a good job in project screening and evaluation and demonstration, strictly control the entrance. Strengthen PPP project budget management, improve the financial affordability demonstration system, improve the government budget information disclosure system and budget performance supervision system, specifically list PPP projects, public performance supervision and evaluation results. Establish the punishment mechanism for dishonesty, strengthen the construction of PPP project government dishonesty information platform, establish the accountability investigation system and responsibility reversal mechanism for government dishonesty, improve the credit repair mechanism of government departments, increase the punishment intensity, and pursue responsibility for life.

Fourth, strengthen financial support through multi-measures of financing. To explore the supporting measures for the investment of insurance funds. The top-level design can explore about 5% of basic pension insurance for infrastructure investment in some provinces and municipalities, further relax the restrictions on the investment fields of social security funds and housing funds, and broaden the financing channels for PPP projects. We should encourage project companies to use pledge loans such as emission right, fee right and franchise right, open up financing channels, allow bank loans, entrusted loans, equity and bonds to be the sources of PPP project funds, and try to use asset securitization. (ABS) Activate stock infrastructure.